The political thoughts and opinions of a pragmatic Canadian Libertarian Economist. Do not mistake me for a real journalist, this is just one man's opinion.

Thursday, January 28, 2010

Nationalizing Industries to Reduce Deficits

In the wake of President Obama's state of the union address, the assertion that bothers me the most is that nationalizing health care is going to be an economic benefit and lead to deficit reduction; as though there exists a mystical aura of trickle down government health care. To suggest, as many left wing pundits have, that freeing business from the burden of providing health insurance and transferring the burden to taxpayers is going to have a net positive effect on GDP and deficit size is ludicrous.

There are legislative options for reducing insurance costs that do not include nationalizing the industry. The government rarely does anything more fiscally efficient than the private sector, but if you allow market collusion and impede the competition between competing providers, there will be a net loss in both efficiency and of mutually beneficial transactions. I do not subscribe to the hardcore Ron Paulish Libertarian ideology of "remove any and all rules and regulations which govern economies and industries." There are instances where state intervention and regulation can increase the social good. Fighting against collusion, corruption, and many other potential ethical liabilities are a good thing.

I thought it was telling that today Evan Soloman was running video footage of Scott Brown's acceptance speech over the caption "Death of Conservatism: Republicans have become too ideological". That's right, Republicans winning a Senate seat in the Liberal stronghold of Massachusetts that has not elected a Conservative Senator in 30 years is a clear sign that Conservatism is dying due to their extreme ideology. Granted, that is the type of partisan spin that I have come to expect from Evan Soloman and the CBC.

9 comments:

I have some experience with the software requirements for medical professionals accounting in the US and Canada, and I would say that moving away from private insurance to a single payer system would dramatically lower US healthcare costs, as the current model imposes massive administrative costs on doctors and hospitals.

What I am against is the governments's involvement of delivery of healthcare, including deciding on what procedures and drugs should be used/paid for, internal paperwork demands on hospitals and political interference in the running of hospitals.

I guess the big companies like "public" health care as it takes the burden of health care off of them. So the stock market may be unnaturally high since it is a boon for those companies. But in general the lack of tax relief and the inevitable inflation due to the huge deficits are not good for all the rest of us.

"collusion, corruption, and many other potential ethical liabilities" are all considered aggressions against private property. If I understand Libertarianism correctly, the main function of government is to protect individuals against aggression against their property.

"There are instances where state intervention and regulation can increase the social good"

Who gets to decide? The Liberals are masters of national visions which are for the social good. Our socialized healthcare system is supposed to be for the social good. "Social good" is just a cover term for state social and economic engineering which inevitably leads to incursions in peoples' private lives making it more and more difficult to realize their own visions.

In any case, I agree that the claim is ludicrous. Besides, even if it were the case, you would no longer have a free system.

What a numbskull. Wonder what he eats for breakfast...whatever it is, we should avoid it like the plague.Sometimes I wonder if these talking heads make those senseless remarks to attract people to their shows so we can watch them for our daily doze of snorts and laughs.Who knows!!

Canada and the U.S. are both facing some very serious problems that, in my opinion, are attributable to a single cause which I will put forward below.

Presently, the economies of both nations are faced with severs stagnation. Manufacturing job losses are severe, productivity and the ability to compete are declining, governments, at all levels, are finding it harder than ever to finance basic services, entitlement programs are chewing up the bulk of government expenditures, and the middle class is being squeezed out of existence.

As far as I am concerned, all these problems arise from the fact that the only sustained growth industry in both countries for many years has been government. The expansion of governments has far outstripped the growth in population and the growth in GDP. Pervasive, intrusive, overly-bureaucratized governments have insinuated their control and regulation into every facet of the citizens' lives. Governments produce nothing tangible. They take money from every enterprise of the citizenry in the form of taxes, fees, duties, etc. then shuffle it through the hands of a bloated, paper-shuffling bureaucracy and return what is left to the public. They regulate, administer, systematize, manage, control, dictate, and legislate every activity from birth, death, speech, sporting activities, eating habits, thought, and on, and on, ad infinitum in a misguided effort to create some Utopian paradise. Government red-tape and regulation is the main impediment to freedom and growth. Corporations and the individual spend as much time trying to get around government control as they do at being creative.

I started working in the mid-fifties. Those years, and the sixties were a paradise compared to today. You actually got to keep a good portion of what you earned. You had extra money in your pocket to spend on anything you liked whether frivolous or necessary. There was none of the penny-pinching-just-to-survive paradigm that prevails today. And the reason it was so was that there was far less government to burden us all. A couple of years ago I had a discussion with an EMS worker employed by the City of Calgary. He had wondered why he wasn't any further ahead in life since he had a good job with regular pay raises. He was a guy who kept records, so he pulled out his files and went back over his pay stubs and city tax records for the previous six years. Even though his salary had increased over 15% during that time, his take-home pay had remained essentially the same. The additional money he had earned had been partially gobbled up by increased federal taxes, increased CPP deductions, and increased IE deductions. The rest had been eaten up by municipal taxes that had gone up over 20% and increased insurance rates to cover the increased evaluation of his home. Had he gone back further he could have added in a 7% kick in the teeth when the GST came into affect. All this man's increased salary and then some, had gone to fill the ever widening maw of the government.

My contention for years has been, and remains, that the growth in non-productive government agencies are stripping this country of the ability to sustain itself and its citizens. Until we halt and roll back the role of governmental intrusions in our lives this country will continue on a slow but steady decline into abject penury.

I agree with Powell's post. I have done a lot of thinking about how much tax money actually gets to where it's supposed to go just in my career industry alone - childcare. One of my good friends works with special needs kids and currently makes just under $14/hr. She gets about 20 hours a week with various clients. But we talked about how the money is essentially supposed to be for helping the child, giving them a trained aide right? However, the money goes through a couple of levels before it gets there. For example, my friend's bosses and anyone in the building in charge of paperwork and typing in the hours, keeping track of everything. And above them, their head office in Edmonton who also has a large staff typing in the info and deciding where the money is going, how many hours each child is allotted, etc. All of those people are also paid with the tax dollars, before it even gets to my friend who is actually the trained aide. The people in the office here make between $18 and $22/hr - more than the person who received the education in order to help the special needs clients. That doesn't really make sense to me. Who knows what the staff in Edmonton make, and who knows how many levels there are above them. It's disconcerting to think that 5 hours a week of care for one child actually costs MUCH MUCH MUCH more than his carer is getting, ie much much more than the care this child is receiving. It baffles me.

So I extend that example to pretty much every other program out there and it's quite staggering to think of how much money is being used up. Sure, those are jobs and if they were cut, that means more people out of work but that's where they trap us I think. I don't mind my tax dollars going to help people, I really don't. But I do mind that the money is long spent before it even gets to the proper recipient. Think how much could be saved by eliminating, stream-lining some of these programs? And the right people would be getting the money, with MORE left over to put towards other things. If we are going to keep these programs, they need to be run MUCH more cleanly than they are now.